Gann Theory of Price and Time 


Gann Theory of Price and Time calculates possible future turning points in markets by relating price and time, rather than price alone.

From The W. D. Gann Method of Trading- A Simplified, Clear Approach - by Gerald Marisch:

W. D. Gann, creator of Gann theory, was a trader of the early 20th century. His ability to profit from the stock and commodity markets remains astounding, having netted over $50,000,000 from the markets during his trading career and averaging a success rate for trades of 80% to 90%.

His successful demonstrations of Gann theory are legendary. Gann routinely converted small amounts into fortunes, increasing their net balances by several hundred percent.

Numerous examples of the successful application of his Gann theory include:

1908 - a $130 account increased to $12,000 in 30 days.

1923 - a $973 account increased to $30,000 in 60 days.

1933 - 479 trades were made with 422 being profitable. An accuracy rate of 88% and 4,000% profit.

1946 - A 3-month profit of $13,000 from a starting capital of $4,500 - almost 4-fold.

The following paragraph appeared in the December 1909 issue of Ticker Magazine. It was written by R. D. Wyckoff, owner and editor, and describes Gann's proficiency for projecting price targets forward in time:

One of the most astonishing calculations made by Mr. Gann was during last summer (1909) when he predicted that September Wheat would sell at $1.20. This meant that it must touch that figure before the end of the month of September. At twelve o'clock, Chicago time, on September 30th (the last day) the option was selling below $1.08 and it looked as though his prediction would not be fulfilled. Mr. Gann said, "If it does not touch $1.20 by the close of the market, it will prove that there is something wrong with my whole method of calculations. I do not care what the price is now, it must go there." It is common history that September Wheat surprised the whole country by selling at $1.20 and no higher in the very last hour of trading, closing at that figure.

Gann's trading methods are based on personal beliefs of a natural order existing for everything in the universe. Gann was part of a family with strong religious beliefs. As a result, Gann would often use Biblical passages as a basis for not only his life, but his trading methods. A passage often quoted by Gann was this from Ecclesiastes 1:9-10:

What has been, that will be; what has been done, that will be done. Nothing is new under the sun. Even the thing of which we say, 'See, this is new!' has already existed in the ages that preceded us.

This universal order of nature also existed, Gann determined, in the stock and commodity markets. Price movements occurred, not in a random manner, but in a manner that can be pre-determined. the predictable movements of prices result from the influence of mathematical points of force found in nature.

These points of force were felt to cause prices to not only move, but move in a manner that can be anticipated. Future targets for both price and time can be confidently projected by reducing these mathematical points of force to terms of mathematical equations and relationships.

The mathematical equations of Gann theory are not complex. They result in lines of support and resistance which prices invariably will follow. The intersection of these lines of force, called Gann Lines, can pinpoint when a price reaction will occur, while others will reflect at what level price reactions will occur.

When price and time meet, we have a potential reversal point in the market. Price and time meeting will happen when any potential price occurs on any of the potential dates.

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